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Erik Louwrier

Fair value accounting for financial instruments: Evidence on opinions and practice


In this study, fair value accounting for financial instruments has been the central theme. This is a topic that has received quite some attention over the last few years and the outcome of this study shows that the debate is probably not yet over. The concern over the accountning for financial instruments arises from the notion that they may be obtained at little investment while their value can change considerably in a short time. Accounting was perceived not to capture adequately these exposures. 


Currently, there is a lack of structured information on the general opinion of the management of listed entities in Europe on fair value accounting for financial instrucments. The information available is generally produced by opponents of the requirement rather than the proponents, which may not yield a complete picture. Furthermore, there has been no research yet on how IAS 39 is applied in practice by those entities that adopted IFRS nor is a comparison available with the reporting practices of entities that apply local GAAP, whish is usually without much detailed guidance on accounting for financial effectiveness of the accounting standards for financial instruments. By means of such analysis, a conclusion could be drawn as to the effectes and effectiveness of the accounting standards for financial instruments and on the interaction between reporting and opinions.